Gm's Revamp: One Step, With One Clear Winner

Let's try to unravel what the General Motors Corp. restructuring means when it takes effect Jan. 1, 1999.

- The effect on consumers?

None. The real effect will be on GM dealers, most of whom sell more than one GM make, such as Chevrolet-Oldsmobile or Pontiac-GMC-Buick or Cadillac-Olds.

Now, a Chevy sales representative, service rep, parts rep and customer-service rep will call on the owner of the Chevy-Olds store and, when all those folks leave, the Olds sales, service, parts and customer-service reps walk in. Under restructuring, one GM rep will call on stores, regardless of the model names on the front door.

Saturn is excluded from the restructuring, by the way, because it operates like GM wants to make the other divisions function--which means that former GM Chairman Roger Smith's goal to Saturnize all of GM soon may be fulfilled. Vilified for the loss of market share during his reign, Smith again may have his picture displayed on company grounds.

- How will the restructuring affect stockholders?

If all goes well, GM will eliminate duplicated effort, cut millions of dollars and thousands of work hours out of the current system and increase its profit per vehicle. If there's one word besides "dividends" that thrills shareholders, it's "profit."

- How will the GM restructuring affect Ron Zarrella, the automaker's marketing honcho, author of the restructuring and the man to whom everyone at GM--except Chairman Jack Smith and the barber on the first floor of world headquarters--will now report?

Zarrella gets jersey No. 23, and don't be so sure that Jack Smith doesn't report to Zarrella. If he pulls off the Saturnizing of GM, Zarella could someday succeed Smith--Jack and Roger.

None. Dealers continue to sell Cadillac, Chevy, Buick, Pontiac, GMC, Olds and Saturn vehicles from their stores. But GM will keep trying to close some of those stores, because it doesn't need as many dealers with a 30 percent market share as it did when it had a 50 percent share.

- Who suffers the most from the restructuring?

Anyone who didn't call Zarrella "Mr." and roughly 1,000 of the 5,100 people in GM's sales, service and parts operations at zone offices all over the country who will not be needed when one person representing GM, rather than one person from each vehicle division, calls on dealers.

GM offered 109 models in 1992, about 80 today, and said it plans to get down to 70 in three to four years. But first things first. This isn't the restructuring, it's the first phase of the restructuring.

Keep in mind that this restructuring is aimed at saving GM $300 million annually, which is chump change when you consider it costs GM $500 million to bring out just one new engine.

All of those cost-cutting ideas were on GM's list, sources said, but you need to streamline the sales and service of your vehicles before you set your sights on what vehicles to sell and service.

The restructuring is going to cost more than just those 1,000 jobs in the field. It will affect central office salaried staffs, too.

GM is showing the United Auto Workers the sacrifices being made in the white-collar workforce as a subtle hint that blue-collar reductions are coming, too. But GM didn't want to focus on the need for fewer UAW workers and kick the union in the groin so soon after the recent strike settlement.

Phase I of restructuring announced this week made no mention of manufacturing efficiencies, and nothing in Phase I makes GM a lower-cost producer of cars. It will make it a lower-cost seller and servicer of cars.

- What effect does GM's decision to spin off its Delphi parts operation next year into a separate company that probably won't employ as many UAW workers have on the restructuring?

It kicks the UAW in the groin, but not until next year. And it will make GM a lower-cost producer of vehicles.